by Barry Stuppler (Nov. 13th) - As the results of the November 7th election unfolded, the question many of my clients were asking was, “How would Democratic control of Congress affect gold, silver and rare coin prices in the near future?” When I learned that the Democrats had taken control of the Senate and the house of Representatives for next session, I thought, “Wow, rare coins just got a booster rocket that will put their prices in orbit.” After I stopped doing handsprings for joy while singing two choruses of Happy days are here again, I wanted to share my thoughts with our clients. The real power of Congress rests with the Congressional Committee Chairpersons. They are able, with party leadership, to set the legislative agendas, hold hearings and, most importantly, issue subpoenas needed for future actions and legislation. In order to predict what is likely to happen, let’s look at the issues that key committee chairmen in both houses have high on their agendas. The House of Representatives. Speaker Pelosi has made many campaign promises. They include: Raising the minimum wage to $7.25 an hour from the current $5.15 per hour. Presenting guidelines for lowering corporate executive pay Rolling back tax credits for highly profitable oil corporations Negotiating with drug companies for lower prices for federal health programs like Medicare Raising taxes on the wealthiest Americans Giving tax breaks for college tuition More legislative disclosure, including identifying sponsors of earmarked funding More legislative disclosure, including identifying sponsors of earmarked funding: Charley Rangel for Ways and Means John Dingell for Energy and Commerce Barney Frank for Financial Services Henry Waxman for Government Reform John Conyers for Judiciary David Obey for Appropriations Charley Rangel, a highly visual critic of the Iraq War, known to be concerned and a liberal Democrat respected as pro small business and pragmatic. What is likely to be on Mr. Rangel’s agenda for the next session? Ending tax shelters for corporations that have moved American jobs overseas. Tax cuts for low and middle income taxpayers. Strong protection for American labor and manufacturers in any trade deal with China and other low-wage countries. Reject extension of the 15% tax rate on capital gains and dividends which are scheduled to expire in 2010. Eliminate the alternative minimum tax (AMT), which would help lower taxes for low and middle class families but could cost the government $1 trillion over 10 years. John Dingell, an 80 year old with over 50 years in the House of Representatives, has a reputation as an aggressive investigator, and is a vocal supporter of Detroit’s Big Three auto makers. What are John Dingell’s priorities as chairman of the House Energy and Commerce Committee? National health insurance program Repeal liberal tax credits and loan guarantees for energy companies Lower prescription drug prices for seniors Legislation that protects and helps US organized labor Rules to address Internet discrimination Address the issue of cost effective measures for regulation of greenhouse gases. Barney Frank, an extremely intelligent legislator who fells strongly about share holders rights. Mr. Frank will chair the committee with oversight of the Securities and Exchange Commission. What can we expect from Mr. Frank as chairman of the House Financial Services Committee? Legislation allowing shareholders the power to approve executive pay packages More oversight of Insurance and Banking corporations Expand federal aid for affordable housing Weaken some of the more controversial provisions of Sarbanes-Oxley Henry Waxman, a tenacious investigator known for being an aggressive critic of the US Iraq war strategy, high drug prices, and oil company profits. Mr. Waxman has stated that when he assumes the chairmanship of the Government Reform Committee he will: Boost oversight of the Bush administration’s Iraq war strategy. Investigate the federal governments waste, fraud and abuse, especially in Iraq and the Hurricane Katrina-ravaged Gulf Coast. Root out profiteering in homeland security expenditures, pharmaceutical prices, soaring oil-industry profits, and companies like Halliburton. Introduce legislation to allow faster generic versions of biotech medicines, as his priority is to reduce the price of prescription drugs John Conyers will oversee the Federal courts, civil liberties and law enforcement, patents, also trademark issues, bankruptcy, espionage and counterfeiting. A champion of African American causes, he is renowned for his love of jazz. A strong critic of President Bush and the Iraq war, he has stated that his priorities are: Establish a comprehensive guest worker program. Urge Congress that there are grounds to impeach President Bush Urge Congress that there are grounds to impeach President Bush Oppose legislation that allows Bush to conduct warrantless surveillance of innocent Americans David Obey, will chair the very important Appropriations Committee. He is a highly intelligent and effective negotiator with Republicans and Senate counterparts. His priorities are likely to be: Health-research funding Better-trained teachers, and smaller class sizes Affordable health care Help dairy farmers, especially from his home state of Wisconsin. Crack down on the quantity of legislation earmarks I have not reviewed the Democratic Senate chairmanships. With the slight majority of 51 to 49, I believe, with the exception of judicial appointments, the Senate committees will suffer from gridlock and the Democratic House of Representatives will take the leadership role. The Big Question.. What do the agendas and the priorities of these key committee house chairmen mean to the Economy, Federal Budget, Trade and Budget Deficits, Value of the Dollar and most of all future prices for gold, silver and rare coins? My Conclusions… It is clear to me that the common factor in all the committee chairmen’s agenda is to confront the Bush administration and its friends on the Iraq issue, while catering to their democratic constituency. Therefore, I anticipate bigger government, larger budget deficits, a volatile stock market, and higher inflation in the next two years. Democrats want the White House in 2008, and with control of Congress they are going to increase spending for domestic issues, put pressure on Oil, Drug and Health care corporations and provide benefits for low-income and middle-class tax payers. With the ability to set hearings and issue subpoenas, they will target many of the companies that received no-bid contracts for work in Iraq in an effort to embarrass the Bush White House. Gridlock, a weaker dollar, an erratic stock market, higher inflation, and continued high trade and budget deficits are a surety, a perfect storm for higher gold, silver and rare coin prices. I believe the next session of Congress will pass legislation which will provide generous funding for our Iraq troops (more then $2 billion a week) but the legislation will contain a provision requiring that most of our troops be withdrawn from Iraq gradually by the end of 2008. Legislation with this requirement would show that the Democrats support our troops while keeping the Iraq War as a major issue for the 2008 elections. The democratic leadership has virtually guaranteed that all the fundamentals are here for a major move higher in gold and silver. The day after it was confirmed the Democrats would control both houses of Congress (Nov 9th), the precious metals markets reacted with a major rally. Gold was up $17.50, silver up $.48, platinum up $41, and the XAU (a gold stock index) up 5.47 points, while the dollar fell dramatically against most Asian and European currencies. Gold and silver are still at attractive price levels. Gold bullion, although up 21% since the first of the year is down 17% from its high last spring, but is on its way back up. The recent lull in the rare coin market provides an ideal opportunity to add to your gold and silver rare coin holdings. For most investors, I recommend (of their funds allocated to the precious metals/rare coins sector) 70% in high quality gold and silver rarities and 30% in popular gold/silver bullion coins. This diversification should generate exceptional returns on capital while providing excellent liquidity. Always use CoinStats when selecting the best investment quality gold and silver rare coins. For the latest issue of CoinStats, please email me at barry@stuppler.com.